Well, I think we’re basically at the bottom of the market now. There’s talk of another 1 – 2 interest rate increases, one in February at 0.25% is tipped to happen. However, buyers seem a lot more comfortable in their finances now. For me, I don’t think the inflation numbers over December were 100% accurate with everyone spending money on Christmas Presents, thus sinking money into the economy, increasing inflation. However, I’ve heard recently that there is less money going from Australia overseas, which I’m told is a good indication the interest rate increases are pulling down inflation.  What’s funny is that both buyers and sellers are still fighting it out over $20,000; however, after a few open homes in January, it’s definitely seen that the buyers are coming back to the market. I’m seeing buyers who didn’t buy in 2020 returning to the market, they’re spending $150,000 – $250,000 more than they were looking to spend in 2020, when they missed out on buying due to fighting for the $20,000. In loan terms, the $20,000 isn’t a lot in the course of a 30 year loan, and it’s not like the bank gives you the additional $20,000 to spend on renovations. I believe buyers are comfortable with their borrowing capacity and they know/assume there are only a few interest rate increases left before the RBA will have to lower rates again to re-invigorate the economy.  Some buyers are waiting for the “Fixed rate cliff” where a lot of 2 year fixed rates will be coming out of their fixed term and paying triple the amount of mortgage, where some people won’t be able to afford their properties. I don’t know if this will have as big effect as people think. We’ve seen everyone on variable (70% of all loans are variable) and we’ve yet to see any desperate sales. Yes, I am hearing people are suffering from paying $1500 more per month, but they’re certainly not thinking of selling for this additional amount. People will try to refinance to interest only, and if their affordability for refinancing is the issue, the banks are likely to try to assist these people to keep their homes as it’s not going to be a good look for the banks to foreclose on so many people. Yes, some people will panic and sell, but many won’t as they’ll be likely to lose money on the property – selling for less than they paid, and having forked out for stamp duty they’ll be down more than their deposit, so they’ll try to hold on for dear life. The real estate correction was always going to happen, I was shown the chart below showing the standard deviation of real estate in Australia and you can see we got well above it, and now we’re likely smack bang in the middle of the range. Whether we go below it again for a short while, before heading north again, that’s only something we can see in history after the fact.

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